Adidas says it's ditching TV advertising because young people engage with the brand on mobile

Adidas chief
executive Kasper Rorsted
told CNBC on Wednesday that the sports apparel brand has
turned its back on TV advertising.

Rorsted explained the company is looking to boost its ecommerce
revenues from €1 billion ($1.06 billion) in 2016 to €4 billion
($4.25 billion) by 2020 - and Adidas wants to use digital
channels to get there

Ad

He told CNBC: "It's clear that the younger consumer engages with
us predominantly over the mobile device. Digital engagement is
key for us - you don't see any TV advertising any more."

Adidas increased its marketing investments from €1.886
billion in 2015 to €1.981 billion in 2016. As a percentage of
sales, the company's expenditure for its point-of-sale and
marketing investments declined 0.8 percentage points to 13.1%,
from 13.9% in 2015.

source

Adidas Annual Report

The company spends almost half of its marketing investments on
partnerships, while its other marketing expenditure goes towards
digital, advertising, point-of-sale, and "grassroots"
activations, on the ground with local sports clubs.

Adidas said in its annual report it wants to decrease the ratio
of marketing expenses of partnerships to less than 45% by 2020.

In a letter to shareholders in Adidas' annual report, Rorsted
said:

"A strategic topic that will transform our company over the next
years is digital. Digital touches our company at every point
along the value stream - how we design, develop, manufacture, and
sell our products. Already today, Adidas.com and Reebok.com are
our largest and fastest-growing shops and we will further
accelerate our investments in this area to create competitive
advantages through digital. Growing our digital capabilities will
ultimately also help us do a better job on margin enhancement."

While Adidas looks to be ditching TV advertising in favor of
digital, other brands have recently been vocally cynical about
the effectiveness of online advertising.

In two recent speeches, the chief marketing officer of the
biggest ad spender in the world - Marc Pritchard of Procter &
Gamble -
called on digital platforms to clean up their acts when it
comes to measurement, transparency, and a
"crappy" supply chain. P&G will no longer pay for ads
that don't meet its standards, Pritchard said.

In the US,
digital ad spending was predicted to surpass TV last year.
The jury appears to be out as to which is more effective. A 2014
meta-analysis conducted by researchers at Ebiquity and
commissioned by UK TV marketing body Thinkbox, for example, found
that for every £1 spent on advertising, TV is "the best profit
generator."

source

Thinkbox

That is a view also shared by the chief marketing officer of
Coca-Cola, Marcos de Quinto,
who told Marketing Week last year that TV spend is "critical"
to the brand and generates more sales than digital.